CHAPTER 7
Note to Instructors
Depending upon the availability of time and your goals in teaching the payroll accounting
course, you may use the Payroll Project in one of several ways:
1. Assign only the preparation of payroll registers and posting to employees’ earnings
records.
2. Assign (1) plus recording the entries in the general journal and posting to the general
ledger.
3. Assign (1) and (2) plus completion of the quarterly tax reports.
4. Assign the complete project.
5. Appendix A uses Excel for the short version project in Chapter 7. If students are
completing the short version project using Appendix A, it would be helpful to have them
complete one of the payrolls manually. This would provide a better understanding of the
operations that are being performed by Excel.
Chapter 7 consists of a simulation, or practice set, for payroll accounting. Students will
apply the knowledge acquired in this course to practical payroll situations. This simulation
is a culmination of the information presented in the textbook.
Learning Objectives
After completing the simulation, students should be able to:
1. Prepare payroll registers.
2. Maintain employees’ earnings records.
3. Journalize and post payroll and payroll tax entries.
4. Complete federal, state, and city tax deposit forms and journalize the transactions.
5. Prepare various quarter-end and year-end payroll tax forms.
6. Make the accrual entries for the payroll at the end of a year.
Payroll Project Solution (p. 7–24)
JOURNAL
7–2 Payroll Accounting
Oct. 9 Administrative Salaries ………………………… 51 2,307.69
Office Salaries ……………………………………. 52 4,651.08
9 Payroll Taxes …………………………………….. 56 1,381.11
SUTA Taxes Payable—Employer …….. 22 175.76
23 Administrative Salaries ………………………… 51 2,307.69
Office Salaries ……………………………………. 52 4,651.08
23 Payroll Taxes …………………………………….. 56 1,386.96
FICA Taxes Payable—OASDI …………. 20.1 978.26
Chapter 7 7–3
Nov. 4 Employees SIT Payable………………………. 25 484.42
Cash ……………………………………………. 11 484.42
6 Payroll Taxes …………………………………….. 56 1,343.71
13 Office Salaries …………………………………… 52 2,079.32
13 Payroll Taxes …………………………………….. 56 159.07
7–4 Payroll Accounting
Nov. 16 Employees CIT Payable ………………………. 26 1,218.32
Cash ……………………………………………. 11 1,218.32
20 Payroll Taxes …………………………………….. 56 1,113.15
4 Administrative Salaries ………………………… 51 2,307.69
Office Salaries ……………………………………. 52 4,628.00
Chapter 7 7–5
Dec. 4 Payroll Taxes …………………………………….. 56 1,255.30
9 Union Dues Payable …………………………… 28 32.00
Cash ……………………………………………. 11 32.00
FICA Taxes Payable—HI ……………….. 20.2 34.71
15 FICA Taxes Payable—OASDI ……………… 20.1 3,895.24
7–6 Payroll Accounting
Dec. 18 Administrative Salaries ………………………… 51 77,307.69
18 Payroll Taxes …………………………………….. 56 6,809.33
20–
Jan. 6 Employees SIT Payable ………………………. 2,798.36
Cash ……………………………………………. 2,798.36
Feb. 1 FUTA Taxes Payable ………………………….. 441.24
Cash ……………………………………………. 441.24
Chapter 7 7–7
GENERAL LEDGER
CASH Account No. 11
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 1 Bal. ………….. 9 ……………. …………….. 199,846.33 ……………
9 ……………….. J41 ……………. 12,052.01 187,794.32 ……………
20 ……………….. J41 ……………. 474.55 187,319.77 ……………
7–8 Payroll Accounting
PAYROLL CASH Account No. 12
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ………………… J41 12,052.01 ……………. 12,052.01 …………….
FICA TAXES PAYABLE—OASDI Account No. 20.1
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ………………… J41 …………….. 958.33 ……………. 958.33
9 ………………… J41 …………….. 958.32 ……………. 1,916.65
23 ………………… J42 …………….. 978.26 ……………. 2,894.91
Chapter 7 7–9
FICA TAXES PAYABLE—HI Account No. 20.2
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ……………….. J41 ……………. 224.14 ……………. 224.14
9 ……………….. J41 ……………. 224.12 ……………. 448.26
23 ……………….. J42 ……………. 228.80 ……………. 677.06
FUTA TAXES PAYABLE Account No. 21
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 1 Bal. ………….. 9 ……………. …………….. ……………. 392.94
9 ……………….. J41 ……………. 22.91 ……………. 415.85
SUTA TAXES PAYABLE—EMPLOYER Account No. 22
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ……………….. J41 ……………. 175.76 ……………. 175.76
23 ……………….. J42 ……………. 175.76 ……………. 351.52
7–10 Payroll Accounting
EMPLOYEES FIT PAYABLE Account No. 24
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ………………… J41 …………….. 1,118.00 ……………. 1,118.00
23 ………………… J42 …………….. 1,148.00 ……………. 2,266.00
EMPLOYEES SIT PAYABLE Account No. 25
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ………………… J41 …………….. 474.55 ……………. 474.55
20 ………………… J41 474.55 ……………. ……………. ……………
EMPLOYEES SUTA PAYABLE Account No. 25.1
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ………………… J41 …………….. 10.85 ……………. 10.85
23 ………………… J42 …………….. 11.07 ……………. 21.92
Chapter 7 7–11
EMPLOYEES CIT PAYABLE Account No. 26
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ……………….. J41 ……………. 602.89 ……………. 602.89
23 ……………….. J42 ……………. 615.43 ……………. 1,218.32
GROUP INSURANCE PREMIUMS COLLECTED Account No. 27
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 23 ……………….. J42 ……………. 181.20 ……………. 181.20
UNION DUES PAYABLE Account No. 28
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 9 ……………….. J41 ……………. 16.00 ……………. 16.00
7–12 Payroll Accounting
SIMPLE CONTRIBUTIONS PAYABLE Account No. 29
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
ADMINISTRATIVE SALARIES Account No. 51
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 1 Bal. …………… 9 …………….. ……………. 42,692.27 …………….
9 ………………… J41 2,307.69 ……………. 44,999.96 …………….
OFFICE SALARIES Account No. 52
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 1 Bal. …………… 9 …………….. ……………. 28,350.00 …………….
9 ………………… J41 4,651.08 ……………. 33,001.08 …………….
Chapter 7 7–13
SALES SALARIES Account No. 53
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 1 Bal. ………….. 9 ……………. …………….. 28,525.00 ……………..
9 ……………….. J41 3,600.00 …………….. 32,125.00 ……………..
PLANT WAGES Account No. 54
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
Oct. 1 Bal. ………….. 9 ……………. …………….. 42,657.30 ……………..
9 ……………….. J41 4,898.00 …………….. 47,555.30 ……………..
PAYROLL TAXES Account No. 56
Balance
Date Item P.R. Dr. Cr. Dr. Cr.
20–
7–14 Payroll Accounting
PAYROLL REGISTER (left page)
Re
g
ular Earnin
g
s Overtime Earnin
g
s Deductions
Name
Hrs.
Rate
Per
Hour
A
mount
Hrs.
Rate
Per
Hour
A
mount
Total
Earnin
g
s
OASDI
HI
FIT
SIT
SUT
A
Pa
y
da
y
, October 9, 20– For Period Endin
g
October 3, 20–
Bonno, A. M 4 80 17.60 1,408.00 ……. ………. …………. 1,408.00 87.30 20.42 45.00 43.23 0.99
g
Pa
y
da
y
, October 23, 20– For Period Endin
g
October 17, 20–
Bonno, A. M 4 80 17.60 1,408.00 4 26.40 105.60 1,513.60 93.84 21.95 55.00 46.47 1.06
Fer
g
uson, J. M 5 80 ……… 2,250.00 ……. ………. …………. 2,250.00 139.50 32.63 135.00 69.08 1.58
Ford, C. S 2 80 ……… 1,220.00 ……. ………. …………. 1,220.00 75.64 17.69 107.00 37.45 0.85
Mann, D. M 4 80 ……… 1,350.00 ……. ………. …………. 1,350.00 83.70 19.58 39.00 41.45 0.95
Pa
y
da
y
, November 6, 20– For Period Endin
g
October 31, 20–
Bonno, A. M 4 80 17.60 1,408.00 ……. ………. …………. 1,408.00 87.30 20.42 45.00 43.23 0.99
Fer
g
uson, J. M 5 80 ……… 2,250.00 ……. ………. …………. 2,250.00 139.50 32.63 135.00 69.08 1.58
*$600 +
(
38 × $15.00
)
†$611.54 +
(
39 × $15.29
)
Pa
y
da
y
, November 13, 20– For Period Endin
g
November 14, 20–
(
Dischar
g
ed November 13, 20–
)
Pa
y
da
y
, November 20, 20– For Period Endin
g
November 14, 20–
Bonno, A. M 4 64 17.60 1,126.40 ……. ………. …………. 1,126.40 69.84 16.33 17.00 34.58 0.79
Fer
g
uson, J. M 5 80 ……… 2,250.00 ……. ………. …………. 2,250.00 139.50 32.63 64.00 69.08 1.58
M
arital Status
No. W/H Allow.
Chapter 7 7–15
PAYROLL REGISTER (right page)
Deductions Net Paid Taxable Earnin
g
s Labor Cost Distribution
CIT
Group
Ins.
Un-
ion
Dues
SIMPLE
Ck.
No.
A
mount
OASDI
HI
FUTA
SUT
A
Admin.
Office
Sales
Plant
Pa
y
da
y
, October 9, 20– For Period Endin
g
October 3, 20–
54.92 8.00 ………….. 672 1,148.14 1,408.00 1,408.00 …………. ………….. ………….. …………. …….……. 1,408.00
87.76 ……… ………….. 673 1,784.45 2,250.00 2,250.00 …………. ………….. ………….. …………. 2,250.00 …………..
Pa
y
da
y
, October 23, 20– For Period Endin
g
October 17, 20–
59.04 16.50 8.00 ………….. 682 1,211.74 1,513.60 1,513.60 …………. ………….. ………….. …………. ………….. 1,513.60
Pa
y
da
y
, November 6, 20– For Period Endin
g
October 31, 20–
54.92 ……….. 8.00 ………….. 692 1,148.14 1,408.00 1,408.00 …………. ………….. ………….. ……….... ………….. 1,408.00
87.76 ……….. …….. ………….. 693 1,784.45 2,250.00 2,250.00 …………. ………….. ………….. …………. 2,250.00 …………..
Pa
y
da
y
, November 13, 20– For Period Endin
g
November 14, 20–
Pa
y
da
y
, November 20, 20– For Period Endin
g
November 14, 20–
43.93 16.50 8.00 …………… 703 919.43 1,126.40 1,126.40 …………. ………….. ………….. …………. ….………. 1,126.40
87.76 26.40 …….. 500.00 704 1,329.05 2,250.00 2,250.00 …………. ………….. ………….. …………. 2,250.00 .………….
7–16 Payroll Accounting
PAYROLL REGISTER (left page)
Re
g
ular Earnin
g
s Overtime Earnin
g
sDeductions
Name
Hrs.
Rate
Per
Hour
Amount
Hrs.
Rate
Per
Hour
A
mount
Total
Earnin
g
s
OASDI
HI
FIT
SIT
SUT
A
Pa
y
da
y
, December 4, 20– For Period Endin
g
November 28, 20–
Bonno, A. M 4 80 17.60 1,408.00 8 35.20 281.60 1,689.60 104.76 24.50 74.00 51.87 1.18
g
Pa
y
da
y
, December 14, 20– For Period Endin
g
December 12, 20–
Estate o
f
g
(
Vir
g
inia A. Russell died December 10, 20–
)
*$1,260 + $630 +
(
32 × $15.75
)
Pa
y
da
y
, December 18, 20– For Period Endin
g
December 12, 20–
Bonno, A. M 5 80 17.60 1,408.00 12 35.20 422.40 1,830.40 113.48 26.54 72.00 56.19 1.28
Fer
g
uson, J. M 5 80 ………. 2,250.00 ……. ………. ………… 2,250.00 139.50 32.63 64.00 69.08 1.58
Marital Status
No. W/H Allw.
Chapter 7 7–17
PAYROLL REGISTER (right page)
Deductions Net Paid Taxable Earnin
g
s Labor Cost Distributions
CIT
Group
Ins.
Un-
ion
Dues
SIMPLE
Ck.
No.
A
mount
OASDI
HI
FUTA
SUT
A
Admin.
Office
Sales
Plant
Pa
y
da
y
, December 4, 20– For Period Endin
g
November 28, 20–
65.90 ……….. 8.00 ………….. 712 1,359.39 1,689.60 1,689.60 …………. ………….. …………. ………….. ………….. 1,689.60
Pa
y
da
y
, December 14, 20– For Period Endin
g
December 12, 20–
Pa
y
da
y
, December 18, 20– For Period Endin
g
December 12, 20–
71.39 16.50 9.00 ………….. 723 1,464.02 1,830.40 1,830.40 …………. ………….. …………… …………. …………. 1,830.40
EMPLOYEES’ EARNINGS RECORD
Regular
Earnings Overtime Earnings
Deductions Net Paid
Cumulative Other Ck.
Payday Hrs. Rate Amount Hrs. Rate Amount Earnings OASDI HI FIT SIT SUTA CIT SIMPLE Deduct. No. Amount
BONNO, Anthony V.
Year-to-Date
Total ……. ………. 10,293.40 ……. ………. 1,028.60 11,322.00 701.96 164.17 810.00 347.59 7.93 441.60 …………. 216.80 …… 8,631.95
10/9 80 17.60 1,408.00 ……. ………. ……………. 12,730.00 87.30 20.42 45.00 43.23 0.99 54.92 …………. 8.00 672 1,148.14
FERGUSON, James C.
Year-to-Date
Total ……. ………. 23,125.00 ……. ………. ……………… 23,125.00 1,433.75 335.31 2,291.00 709.94 16.19 901.97 …………. 132.30 ……. 17,304.54
10/9 80 ………. 2,250.00 ……. ………. ……………… 25,375.00 139.50 32.63 135.00 69.08 1.58 87.76 …………. …….…… 673 1,784.45
FORD, Catherine L.
Year-to-Date
Total ……. ………. 6,300.00 ……. ………. ……………… 6,300.00 390.60 91.35 639.00 193.41 4.41 245.73 …………. 37.80 .….. 4,697.70
10/9 80 ………. 1,220.00 ……. ………. ……………… 7,520.00 75.64 17.69 107.00 37.45 0.85 47.58 …………. …………. 674 933.79
7–18 Payroll Accounting
EMPLOYEES’ EARNINGS RECORD
Regular
Earnings Overtime Earnings
Deductions Net Paid
Cumulative Other Ck.
Payday Hrs. Rate Amount Hrs. Rate Amount Earnings OASDI HI FIT SIT SUTA CIT SIMPLE Deduct. No. Amount
MANN, Dewey W.
Year-to-Date
Total …… ………. 5,400.00 …… ………. ……………. 5,400.00 334.80 78.30 332.00 165.78 3.78 210.62 …………. 31.50 …… 4,243.22
10/9 80 ………. 1,350.00 …… ………. ……………. 6,750.00 83.70 19.58 39.00 41.45 0.95 52.66 …………. …………. 675 1,112.66
Yr. Tot. …… ………. 13,500.00 …… ………. ……………. 13,500.00 837.00 195.78 770.00 414.48 9.48 526.58 750.00 79.20 …… 9,917.48
O’NEILL, Joseph T.
Year-to-Date
Total …… ………. 42,692.27 …… ………. ……………. 42,692.27 2,646.92 619.04 6,116.00 1,310.65 29.88 1,665.17 …………. 202.50 …… 30,102.11
10/9 80 ………. 2,307.69 …… ………. ……………. 44,999.96 143.08 33.46 191.00 70.85 1.62 90.01 …………. …………. 676 1,777.67
RUSSELL, Virginia A.
Year-to-Date
Total …… 6,240.00 …… ………. ……………. 6,240.00 386.88 90.48 642.00 191.56 4.37 243.38 …………. 31.50 …… 4,649.83
10/9 80 1,200.00 …… ………. ……………. 7,440.00 74.40 17.40 127.00 36.84 0.84 46.80 …………. …………. 677 896.72
Chapter 7 7–19
EMPLOYEES’ EARNINGS RECORD
Regular
Earnings Overtime Earnings
Deductions Net Paid
Cumulative Other Ck.
Payday Hrs. Rate Amount Hrs. Rate Amount Earnings OASDI HI FIT SIT SUTA CIT SIMPLE Deduct. No. Amount
RYAN, Norman A.
Year-to-Date
Total ……. ……….. 13,287.50 ……. ………. 1,397.80 14,685.30 910.49 212.94 1,070.00 450.84 10.28 572.79 …………. 235.70 ……. 11,222.26
10/9 80 18.00 1,440.00 ……. ………. ……………. 16,125.30 89.28 20.88 49.00 44.21 1.01 56.17 …………. 8.00 678 1,171.45
SOKOWSKI, Thomas J.
Year-to-Date
Total ……. ……….. 16,650.00 ……. ………. ……………. 16,650.00 1,032.30 241.43 2,002.00 511.16 11.66 649.42 …………. 94.50 ……. 12,107.53
STUDENT
Year-to-Date
Total ……. ……….. 5,550.00 ……. ………. ……………. 5,550.00 344.10 80.48 409.00 170.38 3.89 216.47 …………. 32.40 ……. 4,293.28
10/9 72 14.00 1,008.00 ……. ………. ……………. 6,558.00 62.50 14.62 97.00 30.95 0.71 39.32 …………. ………….. 680 762.90
7–20 Payroll Accounting